The Only Condition Under Which Risk Can Be Reduced to Zero

question 89

True/False

The only condition under which risk can be reduced to zero is to find securities that are perfectly negatively correlated (ρ = −1.0)with each other.

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Definitions:

Bad Debts Expense

An expense reported on a company's income statement, representing the amount of non-collectable accounts receivable during a period.

Credit Sales

Transactions where the customer purchases goods or services on credit, paying the supplier at a later date.

Perpetual Inventory Method

An inventory management system where adjustments to inventory accounts are made continuously as transactions occur.

Bank Credit Card

A payment card issued by a bank allowing cardholders to purchase goods and services on credit.